The Economics of Land Use

The reality that California is producing way more marijuana than legal markets can bear was in plain view during the Humboldt County Board of Supervisors' March 19 public hearing on the county's proposed cannabis land use ordinance.

The question is what Humboldt County can do to protect the local industry, which was at one time estimated to account for one out of every four dollars spent here.

During public comment, a visibly frustrated Bruce Ayers, owner of Southern Humboldt Concentrates, told the board that 95 percent of cannabis flowers currently being sold in state dispensaries were grown indoors.

"Outdoor cannabis is essentially worthless nowadays," he said, adding that more and more it's only used in concentrates, sending wholesale prices plummeting to $500 a pound, with some big distributors only willing to pay $300. Amid that reality, Ayers wondered, why is the county prioritizing the permitting of outdoor grows?

Ayers said he already has a county permit for a 7,000-square-foot grow but, because his application for a manufacturing permit is on hold, he has nowhere to send his product, making his cultivation permit essentially worthless.

With an absolute glut of weed in the Golden State — by some estimates, Humboldt County's permitted farms alone could produce more cannabis than the 2.5 million pounds that legal markets are projected to sell in 2018 — others said Humboldt County's future lies in small, sustainable, artisanal farms that can differentiate themselves from the commodity weed produced elsewhere.

On the other end of the spectrum, the board heard from Alex Moore, whose Honeydew Farms holds or is in the process of pursuing permits to cultivate more than 6 acres. Moore argued that any cap "greatly disadvantages farms looking to compete" at the state level and urged a "free market society" approach to cannabis permitting. "We respectfully ask that you not limit a company's ability to grow and compete."

During public comment, a number of people spoke in favor of the draft ordinance's provision for developing a "Humboldt artisanal branding" program that certifies cultivators who meet standards set by the county agricultural commissioner, including a cultivation area of less than 3,000 square feet, that the cultivator reside on the same parcel as the cultivation site, that the product be exclusively sun-grown and meet organic certification standards.

Some, including Humboldt County Growers Alliance Executive Director Terra Carver, called on the board to allow the designation for farms of up to 10,000 square feet, which prompted the question: Just what is a small farm? After all, it was just a few years ago that the California Department of Fish and Wildlife estimated the average grow in Humboldt County was about 2,300 square feet.

As the board briefly batted around the question, Ayers spoke up from the audience, saying he's cultivating 7,300 square feet and can't compete. First District Supervisor Rex Bohn seemed to take umbrage at the implication, saying the board's role is just to set rules and regulations, as they would for a construction project.

"But if you build a really shitty house and it doesn't sell, that's not on us," he said.

When discussing the concept of a cap on permits or the amount of acreage a single farmer can cultivate, Planning Director John Ford made clear to the board that he sees these not as land-use issues but policy decisions. And he's right — these are decisions that will have serious ramifications for the Humboldt County economy and the way wealth is distributed within it.

Local cannabis farmers face a lot of uncertainty in California's new regulated markets. Will there be a future niche for small, artisanal farms much the way microbrews have carved out a market space in the shadow of big alcohol? Will Humboldt County's relatively low excise tax leave space for it to become a concentrate hub that turns commodity cannabis into value-added products? Or is the best path to go full-on free market, letting those with the means to go huge, potentially at the detriment of everyone else?

Following Bohn's housing analogy, the board can't keep a developer from building a shitty house. But it can incentivize rural development or infill, multi-family units or McMansions. The decisions the board makes in the coming weeks on this ordinance carry weighty environmental and economic impacts, and that's absolutely on them.

Thadeus Greenson is the Journal's news editor. Reach him at 442-1400, extension 321, or thad@northcoastjournal.com. Follow him on Twitter @thadeusgreenson.